UNITED STATES OF AMERICA
`BEFORE THE
`FEDERAL ENERGY REGULATORY COMMISSION
`
`
`Building for the Future Through Electric
`Regional Transmission Planning and Cost
`Allocation and Generator Interconnection.
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`
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`)
`)
`)
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`Docket No. RM21-17-000
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`COMMENTS FOR PROTECTING CONSUMERS FROM SOCIALIZED
`TRANSMISSION CHARGES THAT DO NOT BENEFIT THEM, FROM SUBSIDIZING
`NETWORK UPGRADES NEEDED FOR GENERATION INTERCONNECTIONS, AND
`FROM PAYING FOR POTENTIAL UNNEEDED AND COSTLY SUPPLEMENTAL
`TRANSMISSION PROJECTS
`BY
`OFFICE OF THE OHIO CONSUMERS’ COUNSEL
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`Bruce Weston
`Ohio Consumers’ Counsel
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`Larry Sauer
`Deputy Consumers’ Counsel
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`Office of the Ohio Consumers’ Counsel
`65 East State Street, 7th Floor
`Columbus, Ohio 43215
`(614) 466-1312 – Telephone
`Larry.sauer@occ.ohio.gov
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`October 12, 2021
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`I.
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`TABLE OF CONTENTS
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`PAGE
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`INTRODUCTION ...............................................................................................................1
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`A.
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`B.
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`C.
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`The cost causation/beneficiary pays approach to allocating the costs of new
`transmission investment best makes sure that transmission rates charged to
`consumers are just and reasonable. ..........................................................................4
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`The Order No. 2003 approach to allocating network upgrade costs related to
`generation interconnections remains the most reasonable means of making sure
`new generation is properly sized and located. .......................................................10
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`FERC should open a separate investigation into reforming PJM’s supplemental
`transmission project and local transmission planning processes to protect
`consumers from potential unnecessary and excessive charges. .............................12
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`II.
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`CONCLUSION ..................................................................................................................15
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`UNITED STATES OF AMERICA
`BEFORE THE
`FEDERAL ENERGY REGULATORY COMMISSION
`
`
`Building for the Future Through Electric
`Regional Transmission Planning and Cost
`Allocation and Generator Interconnection.
`
`
`
`
`
`
`
`)
`)
`)
`
`
`
`Docket No. RM21-17-000
`
`COMMENTS FOR PROTECTING CONSUMERS FROM SOCIALIZED
`TRANSMISSION CHARGES THAT DO NOT BENEFIT THEM, FROM SUBSIDIZING
`NETWORK UPGRADES NEEDED FOR GENERATION INTERCONNECTIONS, AND
`FROM PAYING FOR POTENTIAL UNNEEDED AND COSTLY SUPPLEMENTAL
`TRANSMISSION PROJECTS
`BY
`OFFICE OF THE OHIO CONSUMERS’ COUNSEL
`
`
`
`I.
`
`INTRODUCTION
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`Consumers should not be required to pay for transmission projects from which they
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`receive no benefit such as not receiving power from those transmission lines or interconnected
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`power plants. Likewise, consumers should not be required to subsidize power plant grid
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`connection costs that do not benefit them. The Office of the Ohio Consumers’ Counsel (“OCC”),
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`the statutory representative of residential retail consumers in Ohio, urges the Federal Energy
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`Regulatory Commission (“FERC”) to keep two fundamental rate principles in mind as it
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`embarks on its inquiry in this Advanced Notice of Proposed Rulemaking (“ANOPR”)
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`proceeding. A central inquiry in this proceeding is who should pay for the new investment in the
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`electric transmission grid that will be needed to deliver power from renewable wind and solar
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`resources to consumers across the nation. First, the courts have long-required, and continue to
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`require today, that the costs of transmission investment be allocated to those who caused the
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`costs to be incurred and/or those who will benefit from those facilities. Second, subsidization of
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`any investment, including the Network Upgrades needed to allow the interconnection of new
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`1
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`generation to the electric transmission grid, is not compatible with competitive markets. In
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`addition, subsidizing power plant interconnections will not send accurate price signals regarding
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`the most efficient and cost-effective location for generation resources in today’s regional
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`markets. The reasoning behind these fundamental rate principles remains valid even in today’s
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`changing environment marked by the rapid growth in renewable resource investments.
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`Under Ohio Revised Code Chapter 4911, OCC represents the interests of approximately
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`4.5 million Ohio residential utility customers in proceedings before state and federal
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`administrative agencies and the courts. Ohio is a retail choice state that allows electric customers
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`to choose their energy supplier. Both the retail marketers and the Ohio default service auctions
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`that procure power for those Ohio consumers who do not switch to a retail marketer depend on
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`the PJM markets for power supplies and for index pricing. Thus, Ohio consumers depend on the
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`competitiveness of PJM’s markets to protect them against unjust and unreasonable rates for
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`electricity supplies. To protect Ohio consumers from excessive rates and charges, the integrity
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`of PJM’s markets must be maintained. This includes the objective that consumers should not be
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`required to subsidize any portion of their electric services costs. Realizing FERC’s objective of
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`competitive pricing in PJM’s markets is critical for states like Ohio that have embraced retail
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`competition in the provision of generation services.
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`FERC’s primary obligation is to provide consumers a “complete, permanent, and
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`effective bond of protection from excessive rates and charges.”1 In recent years, the charges Ohio
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`consumers pay for transmission service has increased by 50% or more due to significant
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`increases in transmission investment in the state. Since 2017, less than 25% of that new
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`investment has been associated with the large regional transmission projects needed for
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`1 NextEra Energy, 167 FERC ¶ 61,096 at P 12, citing Atl. Ref. Co. v. Pub. Serv. Comm’n, 360 U.S. 378, 388 (1959).
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`2
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`reliability or economic efficiency. Instead, the vast majority is related to local projects planned
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`by transmission utilities with little or no oversight by state or federal authorities. These facilities
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`are known as Supplemental Transmission Projects. In just Ohio, over $8.5 billion has been
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`approved for these projects in just four years (2017 through 2020).2 These costs are not shared
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`with the entire PJM region; Ohio customers are required to pay these increased costs.
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`FERC’s inquiry in the ANOPR raises the specter of additional significant increases in
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`transmission rates being imposed on consumers to build out FERC’s vision of the transmission
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`grid of the future. In order to fulfill FERC’s statutory obligation to protect consumers from
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`excessive rates and charges, any proposed policies or rules stemming from this proceeding
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`should reflect three fundamental objectives:
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`1.
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`2.
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`3.
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`Transmission planning, cost allocation and generation interconnection policies
`must be based on the actual transmission needs of consumers and rely on
`competitive solicitations for proposals in order to minimize costs for consumers,
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`The cost of new investment should be allocated to those who cause the costs to be
`incurred or who benefit from the investment, as determined using a methodology
`that could be revisited annually to reflect the changing needs in the region, and
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`Consumers should not be required to subsidize any Network Upgrades that would
`not be needed “but for” generator interconnections to the grid, nor should they be
`required to subsidize state-specific policy goals that provide no benefits to
`consumers in other states.
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`OCC also requests that FERC initiate a separate proceeding to impose more regulatory oversight
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`for Supplemental Transmission Projects and the local transmission planning process in PJM
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`Interconnection, L.L.C. (“PJM”). This action is needed to make sure that no new transmission
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`investment – whether local or regional facilities – can evade FERC’s regulatory oversight and
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`2 Public Utilities Commission of Ohio (“PUCO”), Docket No. 21-0796-GE-UNC, Ohio Power Siting Board Draft
`Report, p. 5, September 24, 2021.
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`3
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`PJM’s competitive solicitation requirements, in particular for Supplemental Transmission
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`Projects.
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`A.
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`The cost causation/beneficiary pays approach to allocating the costs of new
`transmission investment best makes sure that transmission rates charged to
`consumers are just and reasonable.
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`OCC acknowledges FERC’s interest in reassessing the cost allocation methods used by
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`various Regional Transmission Organizations (“RTOs”) and Independent Transmission
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`Operators (“ISOs”) given the changing nature of the generation resources in the nation today. As
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`FERC notes in the ANOPR, “the electricity sector is transforming as the generation fleet shifts
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`from resources located close to population centers to resources, including renewables, that may
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`often be located far from load centers.” ANOPR at P 3. However, FERC should recognize that
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`the nation’s increasing reliance on or desire for intermittent renewable resources does not signal
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`a need for changing the equitable and economically sound principle that the rates consumers pay
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`for power should be based on the cost of providing that service or the benefits received from that
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`service. The current cost causation/beneficiary pays approach to allocating transmission
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`investment costs in PJM best satisfies the Congressional mandate in Section 205 of the Federal
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`Power Act, 16 U.S.C. § 824d, that rates be just and reasonable for monopoly transmission
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`services.
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`It is axiomatic that the cost of new investment in the transmission grid must be paid by
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`those causing the costs to be incurred and/or those benefiting from those investments. The
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`courts have consistently ruled that “[A]ll approved rates [must] reflect to some degree the costs
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`actually caused by the customer who must pay them.”3 The United States Court of Appeals for
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`3 KN Energy, Inc. v. FERC, 968 F.2d 1295, 1300 (D.C. Cir. 1992); Transmission Access Policy Study Group v.
`FERC, 225 F.3d 667, 708 (D.C. Cir. 2000); Pacific Gas & Elec. Co. v. FERC, 373 F.3d 1315, 1320-21 (D.C. Cir.
`2004).
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`4
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`the Seventh Circuit (“Seventh Circuit”) applied this formative rate principle in a 2009 opinion
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`reversing FERC’s order accepting PJM’s proposal to use a broad, cost-spreading approach,
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`known as the postage stamp method, to allocate the costs associated with large regional
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`transmission lines located in the eastern region of PJM to all consumers in the PJM region, even
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`those on the far western edge of the region. In rejecting FERC’s approval of a cost allocation
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`method that would have allocated a significant portion of the costs associated with large new
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`transmission lines needed to serve consumers in eastern PJM to consumers in the western portion
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`of PJM’s footprint, the Seventh Circuit found that:
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`FERC is not authorized to approve a pricing scheme that requires a group
`of utilities to pay for facilities from which its members derive no benefits,
`or benefits that are trivial in relation to the costs sought to be shifted to its
`members. “Not surprisingly, we evaluate compliance with this
`unremarkable principle by comparing the costs assessed against a party to
`the burdens imposed or benefits drawn by that party.”4
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`The Seventh Circuit reasoned that “[t]o the extent that a utility benefits from the costs of new
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`facilities, it may be said to have ‘caused’ a part of those costs to be incurred, as without the
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`expectation of its contributions the facilities might not have been built, or might have been
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`delayed.”5 Based on the evidence in that case, the Seventh Circuit found that “the likely benefit”
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`to consumers in the western region of PJM was “zero” given that FERC attributed “the need for
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`new transmission capacity in PJM to the threat of "degraded reliability in Eastern PJM.”6
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`While the Seventh Circuit required FERC to consider the relative costs and benefits to
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`consumers in determining cost allocation outcomes, it did not require FERC “to calculate
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`4 Illinois Commerce Comm’n v. FERC, 576 F.3d 470, 476 (7th Cir. 2009) (“Illinois Commerce Comm’n I”), citing
`Midwest ISO Transmission Owners v. FERC, 373 F.3d 1361, 1368 (D.C. Cir. 2004); Alcoa Inc. v. FERC, 564 F.3d
`1342, 1346-47 (D.C. Cir. 2009); and Sithe/Independence Power Partners, L.P. v. FERC, 285 F.3d 1, 4-5 (D.C. Cir.
`2002). The Court also cited to FPA Section 205.
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`5 Illinois Commerce Comm’n I, 576 F.3d. at 476.
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`6 Id. at 477.
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`benefits to the last penny, or for that matter to the last million or ten million or perhaps hundred
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`million dollars.”7 It required only that FERC have “an articulable and plausible reason to believe
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`that the benefits are at least roughly commensurate with those utilities' share of total electricity
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`sales in PJM's region.”8 The Seventh Circuit acknowledged that FERC could presume that
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`everyone benefits from high-capacity transmission facilities because those facilities can increase
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`the reliability of the entire network,9 but determined that FERC could not use that presumption to
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`evade its responsibility to compare the costs assessed against a party to the burdens imposed or
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`benefits drawn by that party.10
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`In contrast to its ruling in Illinois Commerce Comm’n I, the Seventh Circuit in a different
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`case upheld FERC’s acceptance of a Midwest Independent System Operator, Inc. (“MISO”)
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`proposal to allocate the costs of multi-value project consisting of high voltage transmission lines
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`on a region-wide, postage stamp basis. Citing Illinois Commerce Comm’n I, the Seventh Circuit
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`stated that “[t]he Federal Power Act requires that the fee be ‘just and reasonable,’ 16 U.S.C. §
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`824d(a), and therefore at least roughly proportionate to the anticipated benefits to a utility of
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`being able to use the grid.”11 The Seventh Circuit relied on evidence in that case demonstrating
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`that “[m]ost [wind farms] are in the Great Plains, because electricity produced by wind farms
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`there is cheaper despite the longer transmission distance; the wind flow is stronger and steadier
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`and land is cheaper because population density is low (wind farms require significant amounts of
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`7 Id., citing Midwest ISO Transmission Owners v. FERC, supra, 373 F.3d at 1369 ("we have never required a
`ratemaking agency to allocate costs with exacting precision"); Sithe/Independence Power Partners, L.P. v. FERC,
`supra, 285 F.3d at 5.
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`8 Illinois Commerce Comm’n I, 576 F.3d at 477.
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`9 Id.
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`10 Id.
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`11 Illinois Commerce Comm’n v. FERC, 721 F.3d 764 (7th Cir. 2013) (“MISO Illinois Commerce Comm’n”).
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`land).”12 The Seventh Circuit Court found that the proposed large multi-value project lines
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`would provide reliability benefits to consumers throughout the region.
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`One year after the Seventh Circuit’s ruling in MISO Illinois Commerce Comm’n, the
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`Seventh Circuit had an opportunity to revisit its ruling in Illinois Commerce Comm’n I when
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`several parties to the PJM proceeding on remand appealed FERC’s order continuing to approve
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`of the postage stamp approach to allocating the costs of the eastern region high voltage
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`transmission lines. The Seventh Circuit again rejected FERC’s PJM cost recovery ruling
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`regarding the potential regional reliability benefits associated with the high voltage lines located
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`on the eastern side of the PJM region, finding that FERC made no effort to quantify the
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`reliability benefits presumed to be received by consumers on the western side of PJM region.13
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`The Seventh Circuit Court distinguished its ruling in the appeal from the MISO proceeding,
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`finding that:
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`Contrast our wind-power decision, Illinois Commerce Commission v.
`FERC, 721 F.3d 764 (7th Cir. 2013), which upheld postage-stamp pricing
`of the transmission lines required to bring western wind-generated
`electrical power to the 562*562 MISO utilities. There was evidence that
`the lines would not yield highly disparate benefits to the utilities asked to
`contribute to their costs. See id. at 774-75. Indeed, the Commission had
`determined that the benefits from the new lines would be spread almost
`evenly across all the utilities. Midwest Independent Transmission System
`Operator, Inc., 133 FERC P 61221, ¶¶ 54-56 (Dec. 16, 2010). It made no
`such determination in the present practical matter; all it did was express a
`hope that things might turn out that way. 14
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`These rulings require FERC to find that the costs of new transmission projects are at least
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`roughly commensurate with the benefits to be received by the consumers charged with those
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`costs. To the extent that new transmission investment is needed to bring renewable energy to a
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`12 MISO Illinois Commerce Comm’n, 721 F.3d at 771.
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`13 Illinois Commerce Comm’n v. FERC, 756 F.3d 556 (7th Cir. 2014) (“Illinois Commerce Comm’n II”).
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`14 Illinois Commerce Comm’n II, 756 F.3d at 561-62.
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`discrete location in any RTO or ISO region, the costs of those projects must be allocated to the
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`consumers in the location receiving those benefits.
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`In this ANOPR, FERC seeks comment on the proposed policy of broadly spreading the
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`costs of new transmission investment needed to move wind and solar power across vast regions
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`of the country. The Seventh Circuit rulings mandate that the costs of such new investment must
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`be roughly commensurate with the benefits to be received by the consumers who will bear these
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`costs. While this concept is universally accepted by most stakeholders in the industry today, the
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`determination of those benefits for any given project is much more controversial.
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`For example, to the extent new transmission investment may be needed to bring off-shore
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`wind power to on-shore cities located on the eastern seaboard in PJM, it is highly unlikely that
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`consumers in Ohio would benefit from those lines or that power. The Seventh Circuit rulings
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`would require that the costs of such investment be allocated solely to the eastern PJM customers
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`those projects would serve and benefit. That is, it is unlikely that the electrons from the offshore
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`wind on the Atlantic Ocean would reach Ohioans. To the extent Ohio consumers receive none of
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`that power and none of the reliability benefits from the new transmission investment, they should
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`not be burdened with the costs of those projects.
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`In any proposed rulemaking that follows this ANOPR, FERC must keep in mind that
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`simply spreading the costs of new transmission needed to move renewable power to discrete
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`locations within an RTO on a postage-stamp (or rate-socialization) basis will not result in just
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`and reasonable rates for all consumers. Notwithstanding the Seventh Circuit’s 2013 ruling
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`upholding MISO’s cost-spreading proposal for certain large multi-value projects, that same
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`Court one year later still found unlawful PJM’ proposal to use the postage stamp approach to
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`disproportionately shift to consumers in western PJM the costs of transmission projects needed
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`to serve eastern PJM consumers.15
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`FERC also should continue to use the “but for” approach to determining the beneficiaries
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`of large new transmission lines needed to move power from remotely-located renewable
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`resources long distances to serve consumers in densely populated cities. To the extent existing
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`transmission facilities in Ohio are reliable and sufficient to serve Ohio needs without large inter-
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`regional lines, the cost of lines needed to move vast amounts of wind or solar power from the
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`western edge of PJM to the east coast cities should not be allocated to Ohio consumers. Power
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`flow models such as PJM’s distribution factor approach to determining beneficiaries for new
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`lines may provide the requisite factual basis for allocating new transmission investment costs to
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`consumers. FERC should not socialize the costs to consumers of large transmission lines built
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`primarily to move large amounts of renewable generation from the east to the west in PJM or
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`between or among various RTOs.
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`Nor should FERC speculate as to where future generation may locate. FERC should not
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`require subsidization for transmission lines on the theory that the line may be needed to serve
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`future generation that may, or may not, be built. Cost allocation decisions must be made on the
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`basis of current or near-term transmission needs. The changing nature of the types of resources
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`serving future loads should not be an excuse to burden all consumers through a postage-stamp
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`approach to allocating costs for facilities that may never benefit them or to move power from
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`generation resources that may never be built.
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`15 Illinois Commerce Comm’n II, 756 F.3d at 565.
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`B.
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`The Order No. 2003 approach to allocating network upgrade costs related to
`generation interconnections remains the most reasonable means of making
`sure new generation is properly sized and located.
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`FERC seeks comment on whether to revise its current approach adopted in Order No.
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`200316 of either initially allocating the costs associated with Network Upgrades that are needed
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`to interconnect a new generator to the transmission system to that generator, and then crediting
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`those upfront payments back over a 20-year period. Alternatively, FERC proposes using a
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`participant funding approach in RTO regions that assigns all of the costs of any needed Network
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`Upgrades required to interconnect a generator to the transmission grid to the first generator
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`whose project causes the need for those upgrades.17 FERC implemented the crediting policy to
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`provide the transmission owners with a source of funds to construct interconnection-related
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`Network Upgrades. By doing so, FERC alleviated delay in construction of those facilities, and to
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`provide interconnection customers with “a strong incentive to make efficient siting decisions,
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`and in general, to make good faith requests for interconnection service.”18 A strong incentive for
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`properly locating new generating resources remains as important for the renewable resources
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`contemplated by the ANOPR as it was for the natural gas-fired resources contemplated in Order
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`No. 2003. Changing the current policy to require that the costs of Network Upgrades, which
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`may not be needed but for the interconnection of one or two generating plants, be allocated to all
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`consumers in the RTO/ISO region would require consumers to subsidize the development of
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`generating plants. Any such policy would fail to send the proper incentives for sound
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`investments that underlie Order No. 2003.
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`16 Standardization of Generator Interconnection Agreements and Procedures, Order No. 2003, Final Rule, 104
`FERC ¶ 61,103 (2003); order on reh’g, Order No. 2003-A, 106 FERC 61,220 (200_); order on reh’g, Order No.
`2003-B, 109 FERC ¶ 61,287 (2004); order on reh’g, Order No. 2003-C, 111 FERC ¶ 61,401 (2005).
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`17 ANOPR at PP 102, 105; see also Order No. 2003, 104 FERC ¶ 61,103 at PP 694-95.
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`18 ANOPR at P 103, citing Order No. 2003-A, 106 FERC ¶ 61,220 at P 613.
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`Subsidies are inherently incompatible with competitive market outcomes, distort
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`economic price signals, and are fundamentally bad for consumers. All consumers are harmed
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`when the competitive market for electricity is laden with subsidized generation. Subsidies do not
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`work in markets because they distort pricing and undermine competition by displacing more
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`cost-effective resources, to the detriment of consumers.19
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`FERC expresses concern (ANOPR at P 112) that failure to broadly allocate the costs of
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`Network Upgrades needed for generation interconnection could result in certain subsequent
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`interconnecting power plants being free riders and not paying their fair share for use of those
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`interconnection facilities. This situation can be better addressed than requiring consumers to
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`subsidize the interconnection of these generating plants.
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`First, FERC and the involved RTO always should be making sure that the Network
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`Upgrades needed for any generating project are properly sized for the generator or generators to
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`be connected. The size of the upgrades should be based on definitive load studies of known
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`interconnection projects. RTOs should not be building out the transmission system on expected
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`consumer needs or anticipated generation interconnections. Transmission Providers should be
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`building for generators in the queue that they know will be developed. FERC should not be
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`embarking on a “if you build it, they will come” approach to transmission planning. Such an
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`approach is destined to leave consumers paying for inefficient, overbuilt, unnecessary or gold-
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`plated transmission systems.
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`19 Grid Reliability and Resilience Pricing, Docket No. RM18-1-000, DOE Staff Report at 14 n.q.
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`11
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`Second, FERC could require annual reassessments of cost allocation determinations.20
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`Transmission Providers could undertake annual reassessments of whether other generators that
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`have interconnected to the system where the Network Upgrades were funded by the first
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`generator on the system are in fact using those Network Upgrades. To the extent they are, FERC
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`could direct the Transmission Provider to use an approach that would annually reassess the
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`beneficiaries of the generation interconnection upgrades. The same is true for any new customer
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`demand growth that are added in the area where the Network Upgrades were constructed, or in
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`situations where the RTO has determined that the Network Upgrades are now providing benefits
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`to existing customers around the upgrades. Both approaches avoid the distorted investment
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`signals inherent in a subsidization approach and both better comport with the cost
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`causation/beneficiary pays precedent.
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`C.
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`FERC should open a separate investigation into reforming PJM’s
`supplemental transmission project and local transmission planning processes
`to protect consumers from potential unnecessary and excessive charges.
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`FERC seeks comment on “whether there is sufficient clarity on the roles and
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`responsibilities between state and federal regulators regarding the local transmission planning
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`criteria and the development of local transmission facilities (e.g., “Supplemental Transmission
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`Projects” in PJM).”21 FERC also requests that stakeholders comment on “whether such
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`transmission facilities require additional oversight and whether additional coordination among
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`state and federal regulators would be beneficial.22 OCC appreciates this inquiry into the
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`20 To the extent an RTO engages in participant funding and allocates the incremental capacity transfer rights
`associated with the Network Upgrades funded solely by the interconnecting generator to that generator, an approach
`of annually redetermining cost allocations would also require an annual redetermination of capacity transfer rights.
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`21 ANOPR at P 171.
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`22 Id.
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`12
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`regulatory gap that exists between the planning processes for regional and local transmission
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`facilities in RTOs, and in PJM in particular.
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`Order No. 89023 established guiding principles for reforming the transmission planning
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`process for both regional and local transmission facilities, including the requirement for a
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`transparent method for reviewing planned new regional and local investment, and for a method
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`of allocating the costs associated with regional facilities.24 In somewhat of a regulatory “Catch
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`22,” although FERC delegated its regulatory oversight authority for regional and local
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`transmission planning to PJM, many of the local Supplemental Transmission Projects, evade
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`regulatory oversight. This is because PJM reviews local projects only to determine whether they
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`will affect regional reliability, but not for the actual need for the project, cost of service, or the
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`cost-effectiveness of the proposed solution to the identified local transmission need. Nor does
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`the state of Ohio Power Siting Board review these projects for need, prudence, or cost efficiency.
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`Currently, more than 75% of the costs of new transmission projects in PJM escape review
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`by both regional and local regulatory authorities. Yet these transmission projects remain a
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`monopoly service for which consumers must pay. Region-wide in PJM, these local
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`Supplemental Projects in 2020 totaled more than $4.3 billion, far outstripping the $1.7 billion in
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`region-wide, baseline reliability RTEP projects overseen by PJM and FERC. In Ohio, 97.6% of
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`the estimated costs for proposed new transmission for the state in 2020, i.e., $1.09 billion in
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`investment out of $1.11 billion in total investments in the state was associated with Supplemental
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`23 Preventing Undue Discrimination and Preference in Transmission Service, Order No. 890, 118 FERC ¶ 61,119
`(Order No. 890), order on reh’g, Order No. 890-A, 121 FERC ¶ 61,297 (2007); order on reh’g, Order No. 890-B,
`123 FERC ¶ 61,299 (2008)(“Order No. 890-B); order on reh’g, Order No. 890-C, 126 FERC ¶ 61,228 (2009) (Order
`No. 890-C).
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`24 Order No. 890 at PP 106, 140-141.
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`Projects that escape any regulatory review.25 The same trend existed in 201926 and 2018.27
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`These Supplemental Transmission Project expenditures only include those over $5 million. To
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`comprehensively address the escalating transmission charges in Ohio and PJM and to protect
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`consumers from unnecessary and excessive charges, FERC should open an inquiry in a separate
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`proceeding to make certain that there is regulatory oversight for utility investment in
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`Supplemental Transmission Projects in PJM.
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`Absent action by FERC, these projects will continue to evade regulatory review, leaving
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`them prone to review only in after-the-fact prudence reviews in transmission rate proceedings.28
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`These after-the-fact prudence reviews are an ineffective and inefficient means of making sure
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`that transmission projects are needed and cost-effective and that consumers pay only just and
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`reasonable rates for transmission service.
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`Of relevance for Ohioans is the fact that on September 24, 2021, the Ohio Power Siting
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`Board (“OPSB”) released a Draft Report29 to the Ohio General Assembly refusing, despite
`
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`25 2020 Ohio State Infrastructure Report at Slides 3, 17, 20-31 (April 2021), available at https://www.pjm.com/-
`/media/library/reports-notices/state-specific-reports/2020/2020-ohio-state-infrastructure-report.ashx.
`
`26 2019 Ohio State Infrastructure Report at 3, 19-20, 23-37 (May 2020) prepared by PJM Interconnection, L.L.C.,
`available https://www.pjm.com/-/media/library/reports-notices/state-specific-reports/2019/2019-ohio-state-
`infrastructure-report.ashx?la=en.
`
`27 2018 Ohio State Infrastructure Report at Slides 3, 18-19, 21-32 (May 2019) prepared by PJM Interconnection,
`L.L.C., available at https://www.pjm.com/-/media/library/reports-notices/state-specific-reports/2018/2018-ohio-
`state-data.ashx?la=en.
`
`28 The Ohio Power Siting Board recently opened an inquiry into whether its enabling legislation should be revised to
`grant it broader oversight over the need for and costs of local transmission projects in the state. Ohio Power Siting
`Board Staff Draft Report to the General Assembly Regarding the Power Transmission System at 6, In the Matter of
`the Ohio Power Siting Board’s Report to the General Assembly Regarding the Power Transmission System, PUCO
`Case No. 21-796-EL-UNC (Sept. 24, 2021), available at
`http://dis.puc.state.oh.us/DocumentRecord.aspx?DocID=ea0feda0-8145-4c4c-accc-18417850c90c (“OPSB Staff
`Draft Report”). However, the current proposal by the Ohio Power Siting Board’s Staff is to rely solely on FERC
`and PJM for these reviews.
`
`29 Id. at P. 10.
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`OCC’s recommendations,30 to review for cost, need, and prudency local Supplemental
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`Transmission Projects. In response to the Draft Report, OCC again recommended that, among
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`other things, the OPSB must review for cost and prudency all Supplemental Transmission
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`Projects rated at 69kV and above. Specifically, OCC noted that over $5.8 billion31 in
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`Supplemental Transmission Projects have been approved in Ohio in just four years (2017
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`through 2020) and nearly all these projects will escape regulatory review.32 If Ohio’s regulators
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`continue to refuse to review Supplemental Transmission Projects for cost, need, and prudency,
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`FERC must step up to close this regulatory loophole.